The contents of this press release and the related Report must not be quoted or summarized in the print, broadcast or electronic media before 31 October 2012, 17:00

UNCTAD/PRESS/PR/2012/036Geneva, Switzerland, (30 October 2012)

Booming collaboration among the world’s emerging countries holds the promise of a sharing of technology and innovation that is particularly suited to the needs and circumstances of developing countries, an UNCTAD report says, but this promising trend may be leaving out a number of poorer countries.

UNCTAD’s Technology and Innovation Report 20121 , subtitled Innovation, Technology and South–South Collaboration, was released today. It notes that exchanges between developing countries accounted for 55 per cent of global trade in 2010, as compared to 41 per cent in 1995, and that the process is already leading to appropriate technology diffusion, technology transfer and innovative capacity (see press release UNCTAD/PRESS/PR/2012/35).

The Report calls for developing countries to harness the potential of South–South collaboration in order to stimulate greater technological growth in the developing world by establishing an “international framework on South–South technology and innovation”. It adds that it is essential for all developing countries to set up institutions to encourage and guide the South–South process so that it contributes to stable, long-term domestic economic growth. Furthermore, it suggests that such countries should pool resources through a South–South innovation and technology pact, so that well-targeted joint efforts can tackle several of the technological challenges that are faced by all developing countries. Such common challenges include public health, food security, climate change, and energy.

There are other advantages to South–South collaboration on technology and innovation, which need to be explored. Developing countries can offer recipient nations appropriate solutions to a number of problems, as they may have technologies that are suitable for use in other developing countries and, in any case, their innovation experiences are highly relevant. In addition, the Report notes that it is helpful for poor countries to have an alternative to such collaboration with the North; this widens their choice of partners to work with, taking in both public- and private-sector actors from the South. Having such a choice can be important, as it can give developing countries a choice of different terms of engagement

The Report notes that although there is significant potential for greater collaboration, this needs to be consciously promoted. Currently, much of it, for example, is steered by Asian powerhouses to other emerging economies such as Brazil, China and India. It is very likely that (see press release UNCTAD/PRESS/PR/2012/35) a substantial number of developing countries elsewhere, and particularly the 48 least developed countries (LDCs), are left out, largely because they lack the necessary basic levels of technological capability. For example, if firms in developing countries are not sufficiently able to offer attractive contractual services (e.g. low-cost contract manufacturing, skilled labour for production and R&D), foreign firms will generally not have market incentives to collaborate. In other cases, LDCs may lack the necessary infrastructure – such as reliable electricity generation, or roads, railroads and ports – that is important for efficient industrial production. Such shortcomings often act as disincentives when firms are making decisions about investing in other developing countries.

These missing capabilities are what Governments of developing countries should strive to remedy, the Report urges. The framework as proposed in the Report is intended to be a guiding, non-binding framework on South–South technology and cooperation. It is presented as a set of five guiding principles to enable developing countries to benefit from the South–South growth trend, and to make significant process towards industrial development.

The five essential principles set out in the Report are that South–South technological exchange should:

• Address the technological needs of developing countries, particularly LDCs;• Promote knowledge sharing and learning for the building of innovation capabilities, based on the “catch-up” experiences of some countries, particularly the emerging economies;• Promote effective means of technological learning, particularly through technological alliances and technology transfer initiatives; • Make South–South foreign direct investment more technology-oriented; and• Pool developing-country resources to address common technological challenges.

The Report proposes a South–South Innovation and Technology Pact (SITEP), as a means to provide institutional support, at three levels, which can help promote technological collaboration in the South in order to enable developing countries to make concerted common efforts to deal with common technological challenges, such as public health, food security, and climate change.

The first level would be to promote technological learning among firms, as an essential complement to ongoing South–South scientific cooperation and technical assistance programmes. The second level would be to promote enterprise development and the financing of specific innovation activities that are of particular importance to developing countries. Finally, the SITEP could act as a platform for sharing innovation experiences and promoting learning at the policymaking stage.